Churn Rate
Churn rate measures the proportion of customers or users who stop using a service or product over a given period.
How to understand churn rate?
The churn rate (or attrition rate) measures the proportion of customers or users who stop using a service or product over a given period. It is a key indicator for evaluating customer loyalty and business stability. A high churn rate means many customers are leaving, which may signal issues with the product, service, or customer satisfaction.
How does churn rate work?
Churn rate is calculated by taking the number of customers lost during a given period and dividing it by the total number of customers at the start of that period. For example, if you start the month with 1,000 users and lose 100, your churn rate is 10% for that month.
Concrete example
Imagine you have a SaaS service with 500 subscribers at the beginning of the year. If, by the end of the year, 50 of them have canceled their subscription, the annual churn rate will be 10% (50/500). This means that one-tenth of your customers stopped using your service over the year.
Why is churn rate important?
Churn rate is essential for understanding a company's health. If many customers leave the service, the company will constantly need to attract new ones just to maintain its revenue, which can become costly and difficult in the long run. A low churn rate, on the other hand, means the company is able to retain its customers—a sign of satisfaction and potential growth.
Looking to reduce your churn rate?
If you want to understand and reduce your churn rate, feel free to contact us via the contact form on our website. We will be happy to help you analyze your data and improve your customer loyalty.